The Ultimate Economic Burden of a Tax Is Best Captured

question 109

Multiple Choice

The ultimate economic burden of a tax is best captured by:

• A) The marginal tax rate
• B) The effective tax rate
• C) The average tax rate
• D) The proportional tax rate
• E) None of these is correct

---

Definitions:

Price Level

The general level of prices for goods and services in an economy at a specific point in time.

Short Run

A period in economics characterized by fixed factors of production, where only some inputs or resources can be adjusted or varied.

Decreases

A reduction in quantity, size, value, or extent of a specific economic variable or commodity.

Expected Price Level

The anticipated average price across all goods and services in an economy over a future period.